Sherwin Williams (NYSE:SHW): Who said nothing good comes out of Cleveland? All it gave us was a US$83bn paint giant

Sherwin Williams (NYSE:SHW) is a near 160-year-old paint company from Cleveland, Ohio capped at over US$85bn.

This company is one we’ve been watching for a while but think now is a good time to consider it. Theoretically, a paint company should only be growing at GDP. But it has managed to deliver a heck of a lot more for its shareholders.

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Overview of Sherwin Williams

Sherwin Williams began in 1866 when then 24-year old Henry Sherwin founded his own painting business with his lifesavings ($2,000). The ‘Williams’ part of the company’s name comes from one of Sherwin’s 2 friends who put in US$15,000 each to become equal one-third partners. Initially it sold other companies’ paints but in the 1870s began making its own paints after buying a former cooperage from one of John Rockefeller’s companies.

At that time, paints were hand-mixed from raw pigments and fillers but it innovated the industry with its own mechanisms. Sherwin served until his death in 1916 but he lived to see his company become the largest paint maker in the world and his moniker of ‘Cover the Earth’ has survived to this day.

Today Sherwin sells paint to 120 countries around the world. It has over 5,000 stores and branches of its own (roughly 4,400 of which are in the USA with 259 in Canada, 334 in Latin America and 86 in the Caribbean), and it sells into 120 countries. Sherwin Williams has raised dividends for 46 straight years, has huge control over its supply chains and has modest capex requirements (targeting <2% of sales). It makes 57% of its revenue from Paint Stores, 29% from performance coatings and 14% from ‘consumer brands’.

Long-term tenures from the boardroom to the ‘frontlines’

Sherwin‐Williams evidently has a great company culture. Its previous CEO John G. Morikis worked his way up to the top job over a 30+ year career at the company until serving from 2016 to 2024. It has very low turnover for a retail company because its staff are not your typical ‘check out chicks or guys’, they are essentially account managers for customers (particularly commercial customers that will keep coming back).

During Morikis’ tenure, Sherwin‐Williams’ reach substantially expanded. The company more than doubled sales in 8 years (From $11bn to $23bn between 2015 and 2024) and the company has expanded its presence abroad through strategic acquisitions. One was Australian brand Wattyl which it owned for 4 years before divesting it in 2021.

Morikis was succeeded by Heidi G. Petz in 2024. She had been with Sherwin-Williams since 2017, joining after it bought Valspar and worked her way up through executive roles including Chief Operating Officer. Morikis left on a high with the company joining the Dow Jones Index at the end of 2024 and the company recording $23.1bn in sales and a $2.68bn profit.

A pivotal time for the industry

As the market leader, the fate of Sherwin Williams will be intertwined with that of the broader painting industry. The US architectural paint industry has used ~800m gallons per year since the pandemic. It is roughly a 50-50 split between amateur DIYers and professionals.

After previously peaking at ~800m gallons in 2004, there were several years of declines – bottoming out in 2009. But only now has it surpassed the pre-COVID peak. And the industry is different from what it was in 2004. Back then, the typical square footage of a houses have grown 23%. So there’s a lot more to be needed.

You name any generation and their life moves will need paint of some sort. Baby Boomers are downsizing and/or moving to assisted living facilities. Gen X and Millennials are upsizing, or perhaps buying homes for the first time. And fresh paint is one of the best ways to add value to it. On top of that, the balance between Professional and DIY is returning to the pre-COVID norm where the former segment was more dominant.

What is next for the company?

Sherwin Williams is well positioned to capture more than its fair share of the new market opportunity with its constant innovation, superior stores and customer service. Investors have been concerned about supply chain issues and cost increases for construction companies, but this company has been unaffected.

As a side note (to illustrate what this company is about), take a look at Sherwin‐Williams’ 2026 Colour of the Year – Universal Khaki. This is an annual tradition, briefly abandoned in 2025 when it went with a ‘Colour Capsule’ and named 9 colours of the year; now its back to one.

Nice! 🥸
byu/chache2013 insherwinwilliams

Every company has to ask what AI means for it. For Sherwin-Williams, it is an opportunity to be a market leader. It launched an app using AI to help homeowners considering giving their houses a fresh lick of paint choose a right colour. Just upload a photo and the tool not only demonstrates alternative paint hues, but even suggests them.

Moreover, Sherwin-Williams is leveraging AI for manufacturing optimisation, predictive maintenance of equipment, intelligent supply-chain/distribution planning, and using proprietary data to inform coatings formulation

Short term headwinds

As we mentioned, Sherwin‐Williams holds a very strong position in architectural paints in the U.S., high brand recognition, and premium pricing capabilities. But it is vulnerable to the broader industry. The construction market has suffered major supply chain issues during the pandemic.

And if you thought stamp duty was an impediment to moving, you haven’t heard of fixed 30-year mortgages. If you got an ultra-cheap loan during the pandemic, why even think about refinancing a loan, let alone move (unless you had to)? Moreover, if inflation persists, raw material and input cost pressures could squeeze margins if pricing can’t be fully passed on.

Sherwin‐Williams’ stagnation (i.e. only gaining 0.25% in 2025) reflects a turnaround/improvement coming scenario. If macro conditions improve (housing, construction, renovation and consumer spending) then Sherwin‐Williams is well-positioned to pick up growth again. Declining interest rates will help.

In Sherwin‐Williams’ most recent quarterly results (the June quarter of 2025), sales were US$6.3bn, up 0.7%. But its net income per share fell to US$3.38, down 9% from 12 months ago, and the company revised its guidance to US$11.20-11.50 per share, down from US$11.56-12.05 previously. This would be down from US$11.33 the prior year. Consensus estimates call for $11.29 EPS and $23.2bn revenue, barely $0.1bn more than in 2024.

2026 and beyond could be great years for Sherwin‐Williams

But analysts expect growth in 2026. They call for US$24.3bn revenue and $12.63 EPS. Then in 2027, $25.5bn and $14.37 EPS. Their mean target price is US$377.71, up 13% from the current share price. Its P/E is 26.4x and its PEG is 2.9x.

Ultimately, Sherwin Williams is not one of those companies that will just be a ‘big company’ forever – it is a long-term growth prospect. We think investors who ride out the rest of this year will enjoy strong returns into the new year.